According to the Financial Conduct Authority’s (FCA) Retirement Income Market Data, a total of 178,990 consumers accessed their pensions to either take an income or fully withdraw their money as cash in the third quarter of 2015.

This represents a drop of 13% from the 204,581 who accessed their pensions in the preceding three months to June.

The statistics reveal that of the near 180,000, 68% fully cashed out, while 32% chose to take an income, in line with the trend seen from the beginning of the year in which a majority of customers fully withdraw their cash.

FCA data looked at five different areas to give the regulator and consumers an insight into how people are using the new pension freedoms.

But rumblings from industry commentators suggest the new pension freedoms may not be encouraging the right behaviour and concerns have been raised over the low numbers of retirees shopping around to get an annuity. Here are the key findings from the FCA report:

• Choices made by consumers accessing their pensions

The FCA found that a total of 178,990 pensions were accessed to take an income or to fully withdraw their money as cash.

Of these, 120,969 pensions (68%) were fully cashed out and of this amount, 88% were small pot pensions defined as below £30,000.

A total of 58,021 pensions (32%) were used to take an income after tax free cash such as a partial drawdown, partial Uncrystallised Fund Pension Lump Sum (UFPLS) or to buy an annuity.

• Guaranteed Annuity Rates – levels taken up and not taken up

In the FCAs sample, 15 providers had pension policies with Guaranteed Annuity Rates (GARs) and overall, 68% were not taken up, though this figure does include customers who are too young to exercise their GAR.

The trend was higher in small pots, where 79% of those with pensions below £30,000 with a GAR did not take it up.

• Levels of withdrawals for customers making a partial withdrawal

The key statistics for those opting for a drawdown or UFPLS at the following rates as a percentage of their pension pots after tax free cash include:

180,321 withdrew less than 2%, compared with 24,396 who withdrew 10% or more.

Those aged 55-59 made the highest level of withdrawals as a percentage of their pension pot.

• Use of regulated advisers and consumers’ stated use of Pension Wise

Those customers who were going into drawdown (58%) had the highest levels of adviser use and across all products and withdrawals, those customers with larger pots were more likely to have used a regulated advisor.

On average, 17% of consumers told their provider they had used Pension Wise. This increases to 22% of consumers with small pots where use of regulated advice is lower.

• Whether consumers change providers when accessing their pensions

The majority of consumers accessing their pensions this quarter stayed with their existing pension provider with 58% of consumers going into drawdown staying with their existing provider and 64% of consumers purchasing annuities stayed with their existing provider.

Reaction

Gareth James, head of technical resources at AJ Bell, said: “It is surprising that 68% of people accessing their pensions during this period fully cashed in their fund.  Pensions are designed to provide a long term income in retirement so these figures suggest the pension freedoms might be encouraging the wrong sort of behaviour.  Most of those full withdrawals are small pots of less than £30,000 so hopefully those people have other pension savings they are using for the long term but, if they don’t, they will potentially be left relying on the inadequate state pension alone.”

Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “In the first six months of this tax year, we have already seen as many people accessing their pensions as we used to see in a typical year before pension freedom. Many aspects of the freedoms are working very well but there are aspects which give cause for concern. Income withdrawal rates are mainly at a prudent level, suggesting that investors are not recklessly running down their savings; annuities are still being purchased, and the full encashments are mainly of the very small pots. However, market competition appears not to be working, with fewer annuity purchasers shopping around.”

Gareth Shaw, head of consumer affairs at Saga Investment Services, added: “The latest figures show that the over 50s have continued a sensible and measured approach to accessing their savings through the pension freedoms. The lack of shopping around for annuities, where 64% of people who bought an annuity stayed with their existing provider, is concerning. The majority of annuities sold in the past quarter were single-life, level deals, which means that thousands of people may be potentially missing out on a higher income by ignoring enhanced annuities. The FCA should be studying the reasons behind this closely, and take action to improve the situation.”

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